Tax News: Promulgated amendments to the VAT Act

Tax News: Promulgated amendments to the VAT Act

The seventh issue of Tax News for 2017 presents a summary of the most important changes in the Value Added Tax Act (VATA), promulgated in State Gazette, issue No 97 dated 5 December 2017, entering into force as from 1 January 2018, except for certain provisions which have a different entry date.

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Registration and deregistration under VATA

The deadline for submitting an application for VAT registration in case of mandatory VAT registration is shortened from 14 days to 7 days.

An application for mandatory VAT registration has to be submitted when the taxable turnover of BGN 50,000 (EUR 25,565) is reached for a period not exceeding two consecutive months, including the current one. In this case, the application is to be submitted within 7 days from exceeding the turnover.

If the taxpayer fails to submit the application within this time limit and the revenue authorities register it ex officio, the person will be liable to pay VAT on the taxable supplies with which the turnover of BGN 50,000 is exceeded until the date of the registration by the revenue authorities.

The provisions allowing refusal of VAT registration of a person who has not provided a collateral to the tax office for unsettled VAT obligations are repealed. The collaterals provided until 31 December 2017 will be released under a special procedure.

The obligation to file an application for VAT deregistration in case of a dissolution of a legal entity without liquidation, of a partnership and of a social security fund is abolished. In these cases, the VAT deregistration will be performed by the revenue authorities ex officio.

Obligations for providing collateral for receiving liquid fuels

The obligation of taxpayers who have performed an intra-Community acquisition of liquid fuels or who have received liquid fuels released for consumption under the Excise Duties and Tax Warehouses Act to provide collateral to the tax office is abolished when the fuels are intended for the taxpayers’ own consumption.

The National Revenue Agency (NRA) will create a publicly available electronic register for these taxpayers and the exemption will apply only to persons entered into the register. The procedure for entry and the content of the register will be set out in the Regulation for Application of the VATA (RAVATA).

Until the establishment of the register, taxpayers will have to submit a declaration to the NRA within 7 days prior to receiving the fuels in the case of intra-Community acquisition or prior to the date when the liquid fuels are released for consumption.

For the collaterals already provided, taxpayers may submit a request to the NRA for their release. The security is to be released within 30 days of the request (unless a tax audit is assigned) after offsetting it against unsettled VAT obligations.

E-filing of VAT returns

The possibility of filing the VAT return, the VIES declaration and the VAT ledgers on paper and/or a technical carrier is abolished except for the cases of filing following VAT deregistration or inheritance. Save for these exceptions, from now on the VAT filing will be only electronic.

Adjustments to input VAT deduction

The provisions in the RAVATA for adjustment of input VAT deduction are transferred to the VATA. These are, in particular, the provisions in respect to (i) the procedure for upward adjustment of input VAT on long-term assets for which initially input VAT was not deducted but subsequently was deducted as a result of the annual adjustments and (ii) the rules for determining the deductible proportion and the pro-rata co-efficient.

The obligation to make an annual input VAT adjustment for long-term assets is repealed for assets which are not available as at the end of the calendar year and for which a one-off adjustment was made under the general VAT rules (for example, in case of shortages or scrap). This rule will also apply for 2017.

Other changes

The zero VAT rate applicable to international passenger transport, which is also extended to vehicles as part of the passenger's luggage, will not apply to vehicles used for cargo transport.

The provision concerning the taxable event in case of supplies effected in stages will also apply to goods and not only to services.

The current registration regime for companies maintaining and servicing fiscal devices is changed to a formal permission regime.

The administrative sanction ‘temporary closing down of a commercial site for a period of up to one month’ may also be levied to a third person, running the site at the moment of its closing down, who knew or should have known that a closing down procedure has launched.

The provision regulating the VAT exemption of supplies of ‘universal postal service’ will not extend to other services included in notion ‘universal postal services’.